All about Trump’s Tariff Plan

There is a lot of talk about the new tariff plans announced by President Donald Trump recently. As with anything President Trump does, there are some who support the new tariffs on imports of aluminum and steel, and others who vocally oppose the plan.

This is not a political blog and we have no interest in discussing the political controversy over the new tariff plan. Our goal here is to simply focus on the facts and tell you what this tariff plan is all about and how it affects you, without getting judgmental about it.

What You Should Know About President Trump’s New Tariffs

To begin with, you should know what a tariff means. A tariff is basically a tax imposed by the government on imported goods and services. The goal is to make the imported goods from other countries less desirable and less competitive by increasing their prices artificially, so as to encourage the domestic companies that make the same or similar goods and services.

 What Does President Trump’s Plan Do?

Basically, President Trump’s plan consists of a 25 percent tariff on all steel imports and 10 percent tariff on aluminum imports. The plan is specifically targeted at China, but exempts Canada and Mexico. The idea is to get other countries at the negotiation table and arrive at a deal that’s better for U.S. companies and U.S. workers.

How It Affects the Industry

As you’re aware most industries in America depend heavily on aluminum and steel imports, whether it is the automobile industry or the construction industry. American steel manufacturers are going to benefit the most from these tariffs. However, other industries may not get the same benefits as they will have to reckon with higher production costs as resources become more expensive.

Here’s a deeper look into the tariffs verus China (Brookings)

 What about Consumers?

It’s not good news for consumers as they might end up having to pay more for cars, electronics, household appliances, beer packaging, food packaging, construction material and other products which are likely to become more expensive because of the tariffs. That’s because the tariffs will lean to an increase in the cost of production, which translates into more expensive goods or products.

 What about Small Businesses?

If you are a small business owner, you will have to pay more for steel and aluminum products.

It’s not just about the tariffs that you should worry about. The Federal Reserve raised interest rates on March 22^nd because of which the cost of capital has just gone up by a notch. This follows a series of rate hikes by the Fed over the last 12 months.

What Can You Do About It? 

If you’re in an industry that’s affected by Trumps tariffs, then we would encourage you to be strategic in your next moves before the tariffs kick in. Whether this means maximizing whatever equipment that you need or safeguarding your interests.

With many different predictions by trade experts of all degrees, we won’t know the actual true effect on the market until the tariffs are in place.